Major drug corporations Pfizer and Allergan have announced that they will merge to form the largest pharmaceutical company in the entire world. The merger still requires the approval from regulators, but assuming it goes through, extremely popular medications such as Pfizer’s Lyrica, Enbrel and Viagra and Allergan’s Botox and Restasis will all be manufactured by the same corporation.
The merger of Pfizer and Allergan is worth about $160 billion. It would represent the second largest corporate merger of all time. The only merger that was larger occurred in 1999 when two major European telecommunications companies combined into one.
Luckily for consumers, the move would be unlikely to cause major increases in the price of major medications. It is unusual for price spikes to occur when two large drug companies merge together. Typically, price increases only take place when smaller pharmaceutical companies join forces.
The deal between Pfizer and Allergan is expected to be completed by the end of 2016. The new company would be even larger than medical giant Johnson & Johnson in terms of market value and sales. This merger represents the latest case of consolidation in healthcare. Drug manufactures, health insurers, hospitals and pharmacies have been trying to increase their sizes by merging in order to better accommodate the current market, which is greatly affected by Obamacare and an aging population.
However, some people are saying that the move is very bad for the United States. Upon completing the merger, Pfizer would be expected to relocate to Ireland, where Allergan is located. Pfizer is currently headquartered in New York, and if the company moves to Ireland, it would be able to heavily cut its federal corporate tax bill.
The United States will lose millions because of the lost taxes from Pfizer. Many people have said that corporate tax savings were a big part of the merger for Pfizer. Such tax inversions have been heavily criticized by politicians. However, despite disgruntled politicians, the merger is still expected to go through as planned.